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Estate Planning 101 for LGBT Couples - Werner Law Firm

Estate Planning 101 for LGBT Couples

Troy Werner and his family

Written by Troy Werner

Troy Werner has been an indispensable asset to The Werner Law Firm since joining in 2009, providing exceptional legal service to its clients.

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POSTED ON: August 18, 2020

Estate planning tools have long been one of the only ways for LGBT couples to ensure that a part of what they own is left behind for their partner. An estate plan constitutes a list of documents and legal precautions created with the explicit purpose of preparing for death. While grim on the surface, an […]

Estate planning tools have long been one of the only ways for LGBT couples to ensure that a part of what they own is left behind for their partner. An estate plan constitutes a list of documents and legal precautions created with the explicit purpose of preparing for death.

While grim on the surface, an estate plan can save your loved ones a lot of grief and money and accelerate the inheritance process. It also ensures that your wishes, especially regarding property, money, medical decision-making, and children, are respected and made known after you die.

However, even with the 2015 US Supreme Court decision to legalize same-sex marriage, estate planning remains just as relevant if not more relevant than ever for those in the LGBTQ community. Here is what you might need to know.

Estate Planning Considerations for LGBT Couples

Since same-sex marriage was legalized nationwide in 2015, thousands of couples have gained the option to marry their partners and enjoy the rights and benefits of marriage. However, there are still certain estate planning considerations that require a little more preparation among LGBT couples than opposite-sex couples, particularly:

      • The adoption of a partner’s biological child(ren).
      • Interference from a spouse’s family members on financial and medical decisions after death or incapacity.
      • Contested wills and disputes caused by family members who refuse to recognize the marriage.

The good news is that LGBT couples have a long list of tools at hand to help avoid these issues. It’s especially important to review your options and go over existing estate planning documents, particularly if you haven’t given estate planning a thought before, or if the last time you’ve visited your will and other estate planning documents was before 2015.

Benefits of a Will

The crux of most estate plans is the will, which enables a person to determine who they wish to transfer property to, as well as who should take care of their surviving minor children. While marriage itself can already help secure a partner’s right to community property in California, a will further designates which property you would want your partner to have, and can let you designate property and assets to others, including close friends and other non-relatives.

Furthermore, just because you can marry does not mean you want to. Wills give you the much-needed ability to determine what your partner gets should you die before or without getting married. However, there are also certain downsides to a will. For one, a will can be contested.

In cases where your spouse or partner might be at odds with your family, you may have to go through extra trouble to create and maintain a meticulous paper trial to ensure that the probate court understands that you are consistently wishing to pass property towards your loved one, even against your family’s wishes.

While the 2015 decision was a big step forward for LGBTQ rights, surveys also indicate that as 4 in 10 LGBT Americans have been rejected by their families for their sexual orientation. Their families may try to interfere with their relative’s will, which can greatly disrupt the probate process.

Furthermore, wills must pass through probate. Depending on the size of an estate and its complexity, the probate process can be very lengthy and expensive.

Trusts as an Alternative to a Will

An alternative to a will is a trust, which gives you much greater control over how the assets and property within said trust are handled and distributed. Trusts bypass probate, trusts cannot be contested, and they offer several other benefits.

Trusts are created via a trust document, which creates a legal entity (i.e. “Jane Doe’s Trust”) that assets and property can be funded into, with certain exceptions (accounts and property that already have beneficiaries assigned to them, such as life insurance policies, retirement accounts, transfer-upon-death property, etc). Once funded into a trust, an asset or property is no longer owned by you, but becomes part of the trust, which is either partially or totally under a trustee’s control.

When you die, it is their job to carry out your wishes with the contents of the trust. Trusts can be either revocable or irrevocable, with irrevocable trusts being much harder to reverse while providing a much greater degree of asset protection, to the point that they are no longer considered a part of your estate. Irrevocable trusts can be used in conjunction with wills to ensure that your estate’s total value remains within the exemption limit for the federal estate tax.

However, because trusts offer much greater control and require the administrative skills of a trustee, they are usually more expensive to create and manage. Outside of situations where it is greatly beneficial to avoid probate and family interference, a will may be a simpler and easier solution.

Power of Attorney and Advance Directives

Wills and trusts are an important part of the estate planning process, alongside accounts and property that can be directly designated to beneficiaries. However, there is more to an estate plan than property and ownership.

LGBT couples should consider creating advance directives such as living wills and documents that assign their partner as their proxy. There has been an unfortunate history of discrimination against LGBT couples and their medical rights, particularly the right to decision-making for a loved one, as well as visitation rights.

A durable power of attorney can further help secure your partner’s right to make decisions in your name should you be incapacitated, while a living will serves as an important guide for your loved ones to understand what life saving measures and medical procedures you would and wouldn’t condone.

Working With a Professional

Setting up an estate plan can be complex. There are many different elements to consider, and what might work best for one person might not be suitable for anyone else. Furthermore, even simple errors or omissions can lead to serious repercussions.

It’s important not to mistake general information for legal advice, and while templates can help many better understand how estate planning documents are set up, they are often kept too generalized by design, and may not be applicable in your case. Please consult with a legal professional when creating or amending estate plan.

While we tend to picture the elderly and the retired when we think of those for whom an estate plan might be a relevant concern, it’s also important to note that estate plans are the sort of thing you can’t take care of in retrospect.

Given recent events, it is fair to be concerned with what the future might have in store for us and prepare for the unexpected. It’s also important to note that only a fraction of Americans seem prepared for the unexpected – less than a third of all Americans reported having a will in 2020, a stark decrease from just three years ago.

Furthermore, estate plans are about far more than just preparing for death. They can have a lot of relevance throughout the living present, particularly for reducing taxes, managing important healthcare decisions, choosing a trusted financial representative, and managing the transfer of wealth.

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